reduce costs with edi
DESCRIPTION
EDI provides many benefits to businesses that choose to implement this technology. One of the foremost reasons businesses choose EDI is for the significant cost savings. Costs throughout the organization, not just in one area, can be reduced by simply switching to EDI. EDI is the transmission of online data which includes invoices, advance shipping notices (ASNs) and purchase orders between two or more organizations without human intervention or manual data entry. The process of transferring these types of data can be done in 4 easy steps using EDI. The process begins with the document being prepared in the agreed upon format, then is translated into EDI format and transmitted to the trading partner. Once received, the trading partner will transfer the EDI data back into a usable format. This is all done automatically by your established EDI network. There are seven major areas where the implementation of EDI has proved to be a strong cost savings tool. These areas include: Chargebacks - Chargebacks are fees that a supplier receives from their customer for instances such as damage to inventory, late shipments or partial shipments and much more. Using EDI to automatically transfer data reduces data entry errors which, in many cases, cause these types of errors. Advance Shipping Notices (ASNs) - ASNs significantly reduce processing time which reduces costs related to labor. Financial transactions - Transmitting payments and invoices via EDI has the potential to reduce the cost of a financial transaction by up to 90%. This could result in an average yearly saving of $117,000.00. Order processing – Implementing EDI can reduce order-to-shipment time by up to 50%. This will increase customer satisfaction and further reduce processing costs as man hours are reduced. Transaction costs - The use of paper will also be reduced after implementing EDI because paper-based documents will no longer need to be generated, reducing costs such as paper, ink, filing, postage and document retrieval. Error correction - Hours spent searching for lost inventory or manually searching for and correcting errors within your database will be reduced as the data transmitted within the EDI files will transfer automatically to the proper fields, eliminating manual entry where errors occur.TRANSCRIPT
Reduce Costs
with EDI
By Angela Cox
Basics of EDI
What is it?
Organized transmission of online data such as:
• Invoices
• Advance shipping notices (ASNs)
• Purchase orders
between two or more organizations without human intervention or manual
data keying
How does EDI work?
Step 1: User prepares the document being sent
Step 2: Documents are translated into agreed upon EDI format using EDI
translation software or by EDI service provider
Step 3: EDI documents are transmitted to your trading partner
Step 4: Trading partner receives and translates data into internal format
Cost Savings with EDI
1. Chargebacks
2. Advance Shipping Notices
3. Financial Transactions
4. Processing Time
5. Paper-based Activity
6. Error Correction
7. Onboarding
Chargebacks
Fee that customers charge suppliers for errors – the purpose of the
fee is to offset the costs incurred by the customer when these errors
occur
Typical Causes for Chargebacks Include:
• Damages to product before being shipped
• Improper product packaging
• Early or late shipments
• Partial shipments
• Items shipped to incorrect location
• ASN arriving late
• Invoice does not match original order
EDI & Chargebacks
When documents are transmitted and translated in real time without
human intervention data accuracy is increased. This will reduce
errors associated with:
• Customer requirements
• Document transmittal standards
• Order processing
• Shipping requirements
• And much more…
and reduce the frequency of chargeback fees from customers.
Advance Shipping Notice (ASN)
Receiving/ Sending ASNs via EDI allows you to prepare for
upcoming shipments by performing activities such as batch label
printing before shipments arrive.
• Utilizing ASNs reduces processing time by up to 60%
• Without ASN it costs approximately $78 to process a single
customer order – with the use of EDI and ASN it costs closer to 2
cents per order.
Advance Shipping Notice (ASN)
$78
$0.02 0
20
40
60
80
100
Without ASN With ASN
=Savings $$$$
Financial Transactions
The cost of making payments and invoicing customers can be
reduced by up to 90% by using EDI
Example:
• Preparing a paper check costs, on average, $5.00
• If you prepare 500 checks per week = $2,500 = $130,000/ year
• Sending a payment with EDI costs, on average, 50 cents
• If you process 500 payments per week = $250 = $13,000/ year
Total possible savings of $117,000 yearly
Processing Time
Implementing EDI in your facility can reduce the order-to-shipment
cycle time by up to 50%
• Processing time is reduced to approximately 3 days
Reduced processing time increases customer satisfaction and saves
your business operating costs with reduced labor hours
Paper-based Activity
EDI transmission eliminates the need to generate paper-
based documentation – this reduction in paper usage
lowers overall transaction cost by 35%
Associated costs that are reduced include:
• Paper
• Printing & Ink
• Storage
• Filing
• Postage
• Document Retrieval
Error Correction
When higher rates of manual data entry exist, data keying error
rates are higher
• Staff spends less time manually entering data when EDI is in use
• Staff spends less time correcting errors or searching for lost
materials when manual data entry is eliminated
• Your facility will save thousands of dollars each year in lost labor
hours correcting these errors
Onboarding Many businesses work with multiple
trading partners, in some cases in
other countries
• When using EDI, trading
partners can be onboarded in
less time
• This will allow you to begin
generating revenue faster
Ready to learn more about how EDI can make your staff more productive and your business more profitable?
Contact us today.
800.933.2839
Online demonstration
Web chat
Datex Corporation
@Datexcorp